Unfortunately, there will likely be a surge in divorces as a result of the stress related to Covid-19. Divorce is one of the most emotional chapters in someone’s life, and getting guidance through such a time is invaluable.
Ending your marriage means you need to paint a realistic picture of your future. Start preparing yourself for the next chapter by finding the answers to important financial questions.
What You Need to Know About Your Finances to Prepare for Divorce
Can you afford the mortgage on the family home? How will you budget? What will your new lifestyle look like? One thing you know for sure – it will be different – so plan on that.
If you don’t already have one, get a firm grip on the financial details of your household. Did you live within your means, or did you spend more than came in? If debt accumulated while married, get a full understanding of each liability. Be aware of all bank statements, retirement accounts and investment accounts as well as other assets that have accumulated during your marriage.
Get copies of your most recent tax returns for your records.
Make sure you have some assets in your name, especially cash reserves, and get yourself a credit card. You will need to start building credit on your own.
If you own real estate together, gather as much information on the property as you can. What is the current value? Is there a loan against the property? How is the property titled, and if it’s an income-generating property, what income does it produce?
Do not try to go through a divorce alone. Surround yourself with others you can count on for support. Your support group might be a completely different circle than you currently have. Having a circle of people who “get it” will have a positive impact on your wellbeing. The ability to speak openly, honestly and authentically will allow you to connect with others who have been down this road and move forward.
I can’t express strongly enough how important it is to get professional support! Divorce is one of the most emotional times of your life, and it’s helpful to have the guidance of a professional as you move through this season of life.
4 Professionals to Work with as You Prepare for Divorce
Do not put off speaking with an attorney. Help yourself make a knowledgeable decision as to the type of attorney that will serve your situation best – examples are mediator, certified family law specialist, collaborative, and litigator. If your heart is fluttering, you know the type of doctor you need. The same is true with a divorce, so educate yourself on the variety of attorneys, and pick one suited to you.
2. Financial Planner
Do not wait until the divorce is final to identify a financial planner who can walk you through the financial implications that arise during and as a result of divorce. Splitting the assets 50/50 and saying each party receives assets valued at $1,000,000 might seem simple, but it’s much more complicated than meets the eye.
Do you own a second home together? Are the assets qualified or non-qualified? If there is a defined-benefit plan, how will it be divided? All assets do not have the same tax consequences!
3. Certified Public Accountant
In many cases, the need for a certified public accountant arises. If you or your spouse owns your own business, a CPA can provide guidance on protecting both the business and personal finances.
Recognizing you might need a counselor or therapist doesn’t mean your weak or broken – it means you recognize divorce is difficult, and therapy can help you maintain your strength. It can also help you make better decisions about divorce. If there are children involved, they may also benefit from having a safe outlet by speaking with an unrelated third party.
If you’re in the throes of your marriage breaking down, you’re not alone. About 40-50% of married couples in the U.S. divorce, and the divorce rate for subsequent marriages is even higher. The Gray Divorce refers to the increasing divorce rate for older couples in long-term marriages. This demographic of divorce is surging, and the repercussions of a divorce at this age are exceptionally hard-hitting.
Help yourself get through this difficult chapter of your life. Educate yourself on the current financial picture of your household, surround yourself with support, and get the right professionals on your side.
It is possible to get through a divorce with your finances and future intact. Start by downloading our complimentary Divorce Financial Planning Guide.